Defining Crypto Treasury Management

Crypto treasury management is the set of policies, controls, and day-to-day processes an organization uses to safeguard, move, account for, and report digital assets. For corporates, asset managers, fintechs, DAOs, and nonprofits, objectives can range from paying vendors to holding strategic reserves or enabling product functionality. 

Regardless of the use case, the disciplines are the same: clear governance, fit-for-purpose custody architecture, well-documented operations, robust risk management, and audit-ready records.

Key Takeaways:

• Begin with a clear, board-approved treasury policy that defines assets, wallet tiers, limits, approvers, and how changes are recorded.

• Build a resilient custody setup that maps hot, warm, and cold wallets to the right jobs, selects qualified custody, self-custody, or a hybrid, enforces dual control, and proves recovery with regular drills.

• Meet compliance by verifying counterparties, screening sanctions, following the Travel Rule for transfers, and keeping evidence for audits ([5], [6]).

Scope and Core Concepts of Crypto Treasury Management

What it covers:

Treasury management spans custody and key management, wallet tiering (hot/warm/cold), approvals and limits, payment operations, liquidity access, on/off-ramps, accounting, tax, and audit support. It also includes counterparty onboarding, sanctions controls, and incident response aligned to cybersecurity and key-management standards (for example, NIST SP 800-57 for key lifecycles and FIPS 140-3 for cryptographic modules). [1][2]

Who uses it and why:

Organizations hold crypto for operating flows (stablecoin payments, vendor settlements), balance-sheet exposure (BTC/ETH reserves), product features (where permitted), or ecosystem participation (governance, on-chain settlement). Suitability depends on board mandate, risk appetite, and jurisdictional rules; many institutions rely on information-security management systems and third-party assurance (ISO/IEC 27001; SOC examinations) to evidence control design and operation.

Key terms you will encounter:

• Qualified custody vs self-custody: legal status, segregation, and attestations differ by regime and provider.

• Wallet tiers: hot/warm/cold environments mapped to approval thresholds and transaction types.

• Multi-signature (multisig) and MPC: approaches to distributing control and reducing single-key risk; threshold cryptography research underpins MPC schemes.
  [13]

• Stablecoins and settlement networks: risk and regulatory treatment vary; international bodies have issued high-level recommendations for governance and risk management of stablecoin arrangements.
  [14]

• Sub-ledgering, fair-value measurement, and audit evidence: evolving accounting standards and confirmation practices for digital assets.

Governance and Policy Design

A strong policy is the foundation of crypto treasury management. It aligns executive intent with practical controls and creates a shared language for risk.

Treasury policy and approval framework:

• Write a board-approved policy describing permissible assets, use cases, venues, and prohibited activities.

• Set spend limits by wallet, role, asset, counterparty, and time window. Require dual control for sensitive actions and step-up approvals for high-risk transactions—a direct application of classic internal-control principles (for example, segregation of duties per COSO).
  [16]

• Document change management: who can alter limits, signer rosters, or wallet routing; how changes are reviewed and recorded.

Segregation of duties and role design:

• Separate the person who requests a payment from the person who approves and the person who signs.

• Apply least-privilege access, temporary elevation for exceptions, and immutable logging that ties actions to human identities (common in SOC 1/SOC 2-audited environments).

Counterparty and venue onboarding:

• Establish due-diligence criteria for custodians, exchanges, OTC desks, liquidity venues, and banks. Capture legal agreements, SLAs, uptime/incident history, and disaster-recovery assurances.

• Maintain a current inventory of approved addresses, wallets, and venues; review access at a defined cadence.

Compliance guardrails:

• Implement KYB/KYC, sanctions screening, and Travel Rule processes for virtual-asset transfers where required (originator/beneficiary information and secure transmittal between VASPs).
  [5]

• Track sanctions guidance relevant to virtual currency, including expectations for screening, geofencing controls, and recordkeeping.

• Record regulatory interpretations by jurisdiction and the legal basis for each activity (licensing, exemptions, or prohibitions).

• Retain evidence of sanctions screening and Travel Rule data exchange, and implement controls/geofencing to avoid prohibited jurisdictions or persons.

Safekeeping Architecture: Custody, Wallets, and Keys

The design of your safekeeping architecture determines how resilient your treasury is to both cyber and operational failures.

Qualified custody vs self-custody:

• Qualified custody centralizes safekeeping with a regulated entity that provides segregation, governance, and commonly requested audit artifacts (e.g., SOC reporting). This can support evidence collection and policy-based approvals; you retain oversight and third-party risk responsibilities.

• Self-custody gives your organization direct control of keys but shifts responsibility for generation, storage, rotation, recovery, and signer independence to your internal controls aligned to recognized standards (for example, NIST key-management guidance and ISO 27001).

Many institutions blend the two: a qualified custodian for vault-tier assets and a tightly controlled warm tier for routine flows.

Wallet tiering and access controls:

• ‘Hot,’ ‘warm,’ and ‘cold’ are commonly used industry terms; specific control sets vary by provider and program design.

• Cold vaults: Offline, highly restricted. Used for long-term reserves and infrequent settlements. Access requires multi-person ceremonies and documented procedures; cryptographic modules and processes should conform to accepted standards (for example, FIPS 140-3).

• Warm wallets: Network-reachable with additional controls (quorum approvals, allowlists, time locks). Used for regular settlements within policy caps.

• Hot wallets: Minimal friction for automated flows and low-value balances; impose strict limits and continuous monitoring. Tie each tier to explicit approval requirements, velocity limits, and monitoring rules. Separate environments for signers and operators; avoid shared devices. Business-continuity planning should describe how operations would proceed if specific devices, locations, or vendors become unavailable.

MPC and multi-signature:

• Multi-signature (on-chain policy) removes a single point of failure and is transparent on-chain, but depends on chain support and wallet tooling.

• MPC distributes key material across participants and produces signatures collaboratively without reconstructing a full private key. Suitability depends on implementation quality, recovery design, and auditor expectations; NIST’s work on threshold schemes offers useful conceptual grounding for MPC-style controls. Neither approach is universally superior; suitability depends on threat model, recovery design, auditor expectations, and asset/venue coverage.

Backups, disaster recovery, and business continuity:

• Create encrypted, geographically distributed backups for seeds or key shares. Store under separate administrative domains and test restores on a defined cadence (e.g., per a documented contingency-planning program).

• Maintain runbooks for lost devices, compromised signers, and emergency rotation. Practice tabletop exercises and record lessons learned.

• Keep an out-of-band communication plan and authorize incident leaders in advance. Information-security management systems (ISO 27001) and control catalogs (NIST SP 800-53) provide structure for these programs.

Where a qualified custodian such as BitGo fits:

Where available and subject to eligibility, a qualified custodian may provide policy-based approvals, segregation, secure signing, and reporting APIs that integrate with treasury systems. Use these capabilities to implement the controls codified in your policy; avoid ad-hoc procedures and keep third-party risk management active (assurance reports, SLAs, incident notifications). Availability, regulatory status, and product features vary by jurisdiction, client type, and asset; nothing here is a commitment to serve any person or to custody any asset.

Liquidity, Payments, and Settlement Operations

Operations translate policy into repeatable, auditable flows.

Working capital, stablecoins, and payment flows:

• Define operating balances by wallet and currency. For stablecoin payments where permitted, establish cutoff times, fee policies, and standard memos/notes for reconciliation. International standard setters have published high-level expectations for governance and risk management of stablecoin arrangements; incorporate those themes into your controls (reserves, redemption frameworks, disclosures). Regulatory treatment, redemption mechanics, reserve disclosures, and counterparty risks differ by issuer; perform independent due diligence and legal review before use. Guidance is evolving; confirm the ‘as-of’ date when designing controls.

• For cross-border use, verify regulatory treatment of the asset, the on/off-ramp partners, and any licensing obligations before moving funds (FATF and local AML rules may apply).

Execution and venue routing:

• Build a request-to-settle workflow: pre-trade checks (exposure limits, sanctions results, available balance), venue selection, and post-trade reconciliation.

• Monitor execution quality with measures such as effective spread and implementation shortfall without implying guaranteed outcomes; fragmentation and market stress can change conditions rapidly (document assumptions and data sources). Metrics are descriptive, not predictive; conditions can change without notice and outcomes are not guaranteed.

On/off-ramp management and banking interfaces:

• Maintain relationships with multiple settlement partners where possible. Document funding and withdrawal paths, fee schedules, and expected timelines.

• Automate sweeps back to custody from operational accounts. Reconcile bank statements, custodial statements, and on-chain records on a schedule defined in policy; preserve artifacts for audit (address mappings, TXIDs, approvals).

Ledgering and reconciliation:

• Use a crypto sub-ledger that tracks addresses, transactions, lot-level cost basis, and realized/unrealized P&L. Map every transaction to an internal request, approval, and destination.

• Reconcile three ways: on-chain data, custodian/exchange statements, and internal books. Log and resolve breaks with root-cause notes; auditors may request independent confirmations and strong evidence of completeness and accuracy for digital-asset balances.

Risk Management, Compliance, and Controls

Risk management is the discipline of stating your exposures plainly and deciding in advance what you will and will not accept.

Market, liquidity, and concentration risk:

• Set exposure limits by asset, counterparty, and venue. Add thresholds for concentration in a single wallet, chain, or settlement partner.

• Run stress scenarios (price gaps, slippage, delayed withdrawals, venue outages) and document how you would reduce risk within policy; public-sector analyses highlight fragmentation and the potential for stress to widen cross-venue gaps.

Operational and security risk:

• Enforce least-privilege access, dual control for sensitive actions, and signer independence across geography and legal entities where possible (COSO, ISO 27001).

• Harden devices used in ceremonies and remove unnecessary radios and software; use allowlists, time-locks, velocity limits, and alerts.

• Record every approval and signing event with immutable logs; align evidence to SOC reporting expectations (design and operating effectiveness of controls).

Third-party risk management:

• Evaluate service providers for independent security attestations, uptime history, and incident transparency. Review breach notification terms, data retention, and encryption standards (SOC reports, ISO certifications).

• Keep a lifecycle: onboarding due diligence, periodic refresh, and termination playbooks (including data export and destruction/rotation for any key material under your control). Provider references are illustrative and not endorsements or offers.

Incident response and business continuity:

• Pre-define playbooks for suspected key compromise, lost signer, failed withdrawal, sanctions hit, and venue outage; assign decision makers and escalation paths.

• Maintain out-of-band contact lists; practice drills and document findings. NIST contingency-planning guidance offers practical structure for testing and improvements.

Accounting, Audit, and Reporting

Standards and interpretations evolve; references herein are as of August 26, 2025 and may change. Coordinate determinations with your auditors.

Finance teams need evidence that is consistent, complete, and easy to tie out.

Accounting treatment and fair-value measurement:

• For US GAAP reporters, FASB ASU 2023-08 requires certain crypto assets to be measured at fair value with changes recognized in net income and includes new disclosures (effective dates vary; early adoption permitted). Coordinate with auditors and disclose “as-of” times for pricing sources.
  [10]

• Under IFRS, holdings of cryptocurrencies are commonly treated as intangible assets unless held for sale in the ordinary course of business; see the IFRS Interpretations Committee’s 2019 agenda decision for classification and measurement considerations. [11]

Sub-ledger, cost basis, and tax documentation:

• Maintain lot-level records that include acquisition date, cost basis, fees, and disposition method. Capture the association between internal requests, approvals, and resulting transactions.

• Store addresses, wallets, and transaction IDs in a registry tied to business purpose and counterparty. Preserve documentation for tax reporting consistent with local law and auditor expectations (AICPA/CIMA practice aids provide helpful guidance on evidence).

Audit readiness and evidence collection:

• Prepare tie-outs between custodian statements, on-chain data, and the general ledger. Use independent confirmations from qualified custodians during audit and retain SOC reports and bridge letters, where available.

• Keep procedure documents, change-management logs, signer rosters, and access reviews available. Demonstrate that controls are both designed and operating as intended (ISO/IEC 27001 for ISMS context; SOC reporting for controls over financial reporting or security, availability, confidentiality). Audit practices differ by firm and jurisdiction; your auditor’s conclusions may vary.

Management and board reporting:

• Provide dashboards of balances, exposures, limits, and exceptions. Track policy attestations, control test results, reconciliation breaks, and incident summaries.

• Report on service-provider health: uptime, SLA performance, audit reports received, and any control deviations (third-party risk program).

A Pragmatic Roadmap for Crypto Treasury Management

Phase 1: Policy first.

Draft or update the treasury policy with counsel. Define objectives, assets, venues, wallet tiers, approvals, limits, and change-management. Establish counterparty onboarding criteria and a sanctions/Travel Rule workflow.

Phase 2: Architecture selection. 

Choose qualified custody, self-custody, or a hybrid based on risk and jurisdiction. Decide on multi-sig and/or MPC, signer independence, and backup strategy aligned to key-management and cryptographic standards.

Phase 3: Pilot low-risk flows. 

Start with small operating balances and stable processes. Prove you can approve, sign, settle, reconcile, and report. Measure execution quality and settlement timelines; document assumptions and data providers.

Phase 4: Scale with controls. 

Add automation where it supports—not replaces—controls. Increase limits only after control testing, reconciliation accuracy, and audit evidence are consistently strong (SOC/ISO frameworks can anchor the control narrative).

Phase 5: Test and improve. 

Run recovery drills, incident tabletop exercises, and vendor failover tests. Review metrics and audit findings; update policy and procedures accordingly (NIST contingency-planning concepts).

Frequently Asked Questions

Does a qualified custodian eliminate operational risk?

No. A qualified custodian can provide segregation, governance, and reporting that can support audit procedures and reduce certain risks, but your organization still owns policy design, approvals, and vendor oversight. Risk cannot be eliminated; follow third-party risk practices and seek assurance reports (SOC) where applicable.

Is MPC safer than multi-sig? They solve different problems and each has trade-offs. Multi-sig enforces policy on-chain and is transparent; MPC distributes key material and can provide asset coverage across chains. Choose based on threat model, auditor expectations, and recovery design; threshold-cryptography literature explains the security model behind MPC/threshold schemes.

Can we rely on a single liquidity venue?

Relying on a single venue concentrates risk. Consider diversified access, documented withdrawal paths, and predefined alternatives for outages or delays; fragmentation and stress can widen cross-venue gaps.

Can stablecoins replace traditional payment rails?

Stablecoins may enable faster settlement in some contexts, but regulatory treatment, counterparty onboarding, and reconciliation processes must be established before production use. Consult international guidance on governance and risk management for stablecoin arrangements.

How do we prove control without exposing secrets?

Use attestations, custodian confirmations, address-ownership proofs, and immutable approval logs. Share procedure summaries and audit reports rather than operational specifics that could increase targeting risk (ISO/IEC 27001 context and SOC reports for independent assurance).

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References (with links)

NIST SP 800-57 Part 1 Rev. 5, Recommendation for Key Management — Part 1 (General). Page: https://csrc.nist.gov/pubs/sp/800/57/pt1/r5/final PDF: https://nvlpubs.nist.gov/nistpubs/specialpublications/nist.sp.800-57pt1r5.pdf

NIST FIPS 140-3, Security Requirements for Cryptographic Modules.
Page: https://csrc.nist.gov/pubs/fips/140/3/final
PDF: https://nvlpubs.nist.gov/nistpubs/FIPS/NIST.FIPS.140-3.pdf

ISO/IEC 27001:2022, Information Security Management Systems — Requirements. Page: https://www.iso.org/standard/27001

AICPA, System and Organization Controls (SOC) — Overview.
Page: https://www.aicpa-cima.com/resources/landing/system-and-organization-controls-soc-suite-of-services

FATF, Updated Guidance for a Risk-Based Approach to Virtual Assets and VASPs (Oct 2021).
Page: https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Guidance-rba-virtual-assets-2021.html
PDF: https://www.fatf-gafi.org/content/dam/fatf-gafi/guidance/Updated-Guidance-VA-VASP.pdf

U.S. Treasury (OFAC), Sanctions Compliance Guidance for the Virtual Currency Industry (Oct 2021). PDF: https://ofac.treasury.gov/media/913571/download?inline= Notice: https://ofac.treasury.gov/recent-actions/20211015 [6]

BIS, Blockchain scalability and the fragmentation of crypto, BIS Bulletin No. 56 (June 2022). PDF: https://www.bis.org/publ/bisbull56.pdf

IOSCO, Policy Recommendations for Decentralized Finance (DeFi) (Dec 2023). PDF: https://www.iosco.org/library/pubdocs/pdf/IOSCOPD754.pdf

NIST SP 800-34 Rev. 1, Contingency Planning Guide for Federal Information Systems (May 2010). Page: https://csrc.nist.gov/pubs/sp/800/34/r1/upd1/final
PDF: https://nvlpubs.nist.gov/nistpubs/legacy/sp/nistspecialpublication800-34r1.pdf

FASB ASU 2023-08, Accounting for and Disclosure of Crypto Assets.
Page: https://www.fasb.org/page/PageContentpageId=%2Fprojects%2Frecentlycompleted%2Faccounting-for-and-disclosure-of-crypto-assets.html
PDF: https://storage.fasb.org/ASU%202023-08.pdf

IFRS Interpretations Committee, Holdings of Cryptocurrencies — Agenda Decision (June 2019). PDF: https://www.ifrs.org/content/dam/ifrs/supporting-implementation/agenda-decisions/2019/holdings-of-cryptocurrencies-june-2019.pdf

AICPA & CIMA, Practice Aid: Accounting for and Auditing of Digital Assets (resource page).
Page: https://www.aicpa-cima.com/resources/download/accounting-for-and-auditing-of-digital-assets-practice-aid-pdf

NISTIR 8214A, Threshold Schemes for Cryptographic Primitives: A Primer on Threshold Schemes (2020).
PDF: https://nvlpubs.nist.gov/nistpubs/ir/2020/NIST.IR.8214A.pdf

FSB, High-level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements (July 2023).
Page: https://www.fsb.org/2023/07/high-level-recommendations-for-the-regulation-supervision-and-oversight-of-global-stablecoin-arrangements-final-report/
PDF: https://www.fsb.org/uploads/P170723-3.pdf

CPMI-IOSCO, Application of the PFMI to Stablecoin Arrangements (Oct 2020).
PDF: https://www.bis.org/cpmi/publ/d198.pdf

COSO, Internal Control — Integrated Framework (2013) (overview).
Page: https://www.coso.org/guidance-on-ic

FinCEN, Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies (FIN-2019-G001).
Page: https://www.fincen.gov/resources/statutes-regulations/guidance/application-fincens-regulations-certain-business-models
PDF: https://www.fincen.gov/sites/default/files/201905/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf

NIST SP 800-53 Rev. 5, Security and Privacy Controls for Information Systems and Organizations. Page: https://csrc.nist.gov/pubs/sp/800/53/r5/upd1/final
PDF: https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-53r5.pdf

IOSCO, Policy Recommendations for Crypto and Digital Asset Markets — Final Report (Nov 2023). PDF: https://www.iosco.org/library/pubdocs/pdf/IOSCOPD747.pdf